Mecklenburg County Employee Compensation

1
Mecklenburg County Employee Compensation

• Budget/Public Policy Workshop
• March 28, 2006

2
Presentation Agenda

• Market-Based Compensation
• Pay-for-Performance
• Competitive Benefits
• Insurance Reserves

3
Potential Impact on FY07 Budget

• Market-Based Compensation
• Annualized FY06 market adjustments 4.8 million
• Pay-for-Performance
• Annualized FY06 Merit Increase .6
  million
• FY07 Merit Increase (full annual cost) 5.8
  million
• Benefits
• Estimated increase for Medical/Dental
  2.7 million
• 401(k)/457 for full year of 5 match 1.2
  million
• Insurance Reserve Funding .7 million
• Total 15.8 million
• Represents Cost in county dollars

4
Market-Based CompensationAddressing Red Lights

• Fair Pay Market Value
• Improve Recruitment (Right Person for Right Job)
• Increase Career Opportunities
• Increase Employee Motivation and Satisfaction

5
Strategy for Change

• Comprehensive Job Classification and Compensation
  Study
• Approved by the Board in December
• Total annualized cost of 9.2 million
• FY06 budget 4.4 million
• FY07 budget request 4.8 million

6
Success Factors

• Sustained commitment to remain at market
• Excellent market data needed
• Good management skills in each department
• Employee communication of system is critical
• Focus is on performance

7
Pay-For-Performance

• Rationale Financial incentives provide specific
  direction and motivation for employees to achieve
  the goals of the organization more productive
  employees who achieve more are paid more.
• Actual Distribution for FY06
• Performance Level of Employees Merit Increase
  
• Exemplary 44 4 to 5
• Successful 55 2.5 to 3.5
• Needs Improvement 1 0 1

8
Pay-For-Performance

• Annualized Cost of FY06 Merit Increases
  600,000
• FY07 Merit Increase (full annual
  cost) 5,100,000
• Increased fringe benefit cost 700,000
• Total 6,400,000
• Represents a 3.5 increase to current payroll

9
Integrating Market-Based Compensation and
Pay-for-Performance

• Position Project Manager (Illustrative only)
• Current Market Rate 44,000
• No market adjustments until FY08
• Employees Current Salary 45,000
• 3 Merit Increase (Successful Performance)
  1,320
• Employees New Salary 46,320
• Increased benefit costs for family coverage
  862
• Pay increase is calculated on the market rate
  rather than employees current salary

10
Competitive Benefits

• FY07 Budget projections
• 12 increase for medical 1/1/2007
• 15 increase for dental 7/1/2006
• Annualized cost of 5 match for 401k/457 plan
  approved in the FY06 budget
• Estimated increase for Medical/Dental 2.7
  million
• Annualized cost for 401k/457 1.2
  million
• Total 3.9 million

11
Medical Cost Trends in the Southeast vs.
Mecklenburg County
2003 2004 2005
Kaiser (South) 5,237 5,519 6,076
Mecklenburg County 4,634 5,377 6,149
12
Medical Insurance Reserve Goals

• Medical/Drug 2,500,000
• Dental 200,000
• Margin (10) 250,000
• Administration 162,000
• Total Reserves 3,132,000

13
Medical Reserve Projection
Item Medical Dental
Balance as of July 1, 2005 1,109,405 (1,015,982)
Receipts thru Feb 28, 2006 21,465,180 1,160,249
Total Cash Balance Receipts 22,574,585 144,266
Claims Paid 22,682,487 1,320,849
Cash Balance at Feb 28, 2006 (107,901) (1,186,582)
Projection to June 30, 2006 1,382,508 (89,040)
Projected Cash Balance at June 30, 2006 1,274,607 (1,265,623)
14
Progress Towards Goal
Item Medical Dental
Reserve Goal 2,500,000 200,000
End of Year Projection 1,274,607 (1,265,623)
Amount needed to get to 50 of Goal 0 732,811

• Notes
• Medical Reserve does not include 300,000
  expected for the CountysMedicaid Part D
• Medical Reserve does not include any savings
  projected from switching toCigna Healthcare

15
Potential Impact on FY07 Budget

• Market-Based Compensation
• Annualized FY06 market adjustments 4.8 million
• Pay-for-Performance
• Annualized FY06 Merit Increase .6
  million
• FY07 Merit Increase (full annual cost) 5.8
  million
• Benefits
• Estimated increase for Medical/Dental
  2.7 million
• 401(k)/457 for full year of 5 match 1.2
  million
• Insurance Reserve Funding .7 million
• Total 15.8 million
• Represents Cost in county dollars